Question: A German importer needs to pay US$1,000,000 to its US supplier in one months time. What will be the cost of payment in by fixing

A German importer needs to pay US$1,000,000 to its US supplier in one months time. What will be the cost of payment in by fixing the payment with certainty today? What is the difference from the rate quoted at the spot market?

The spot exchange rate between the Euro and the Sterling Pound is 1.1299-1.1312. The three month Euro deposits interest rate is 5.64% while the three month Sterling Pound interest rate is 4.86%. A Cypriot importer has to pay in three months a total of Stg250,000 to its UK supplier. What is the expected forward rate to be quoted by his bank and what will be his total cost in Euros?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Scenario: Helping Hand You have just been hired as the new Assistant to the Team Leader of Helping Hand, a community service organisation located in the greater Brisbane area. Your organisation...

1. Do you agree or disagree with the decision in the Lambert case (p. 323, textbook). Explain by making EXPLICIT reference to any of the principles of Contract Law (say which one(s) you are using)...

QUESTION 2 (22 marks) OptiGuard Co is a company based in the United Kingdom (UK). The functional currency used is the British pound (). OptiGuard Co buys raw materials and components from US-based...

Stabilo Limited a United Kingdom construction company has currently placed an order for plant and machinery at a cost of 13 800 000. The European supplier requires payment as follows: Date of order...

What factors should be considered in deciding whether the cost of capital for a foreign affiliateshould be higher, lower, or the same as the cost of capital for a comparable domestic operation?...

It is becoming widely expected that interest rates will rise in the coming year. In recent weeks the 10 year US bond has risen from about 1.50% to 1.80%. Using the appendix for chapter 2 on Webster...

Question 1 4pts The primary goal of financial management is to: Group of answer choices maximize current dividends per share of the existing stock. maximize the value of stockholders or stakeholders....

Need ONLY an answer to Part C, step 1, questions 1 and 3. Term Project Part A: Understanding Financial Statements Locate and use an annual report STEP 1: The Company Assigned to you Find the most...

Locate and use an audited annual financial statement STEP 1: The Company Assigned to you Find the most recent audited annual financial statement online for the Canadian public company assigned to the...

I need chapters 18, 19, 20, and 21 for the workbook for Personal Finance by Madura!! Please help!!! Personal Finance, Fifth Edition by Jeff Madura BUILDING YOUR OWN FINANCIAL PLAN WORKBOOK INDEX...

Under IAS 39, the IASB financial instrument standard in effect at the time, loans receivable were valued at amortized cost. That is, valuation was based on expected future receipts from the loan...

Question 15: Describe the post-fertilization changes in a flower.

The most important organizational factor in empowerment is decentralizing the structure. True False

A restaurant manager has hired you to improve the data management practices of his restaurant. Use an ER diagram to depict the following requirements. The restaurant employs a number of chefs. For...

Alex owns and operates a mobile phone business located in a large shopping center in Perth, WA. Alex was born in Paris, France. He has a family home there where his two grown-up children live. Alex...

The mass of my empty beaker is 53.18g, and the mass of the beaker & water is 132.36g. Calculate Mass of the water, the volume of the water, and calculate density. 80 3. Determine the density of 0 ml...

Identify conditions that would lead an analyst to expect that management might attempt to manage earnings upward. Provide a specific example that illustrates this scenario. Do not use items already...

The number of absences, x, in a Biostatistics course and the final exam grade, y, for seven students. x- 19 = 565 xx-1380 , x2- 75 , y2- 46775 (a) What is the dependent variable? (b) Compute the...

------------------------------------- At the beginning of its first year of operations, Bonita Limited has 4,900, $3 preferred shares and 48,000 common shares. Using the format shown below, allocate...

Does this situation involve the organizations relationship with another group? If yes, what group(s)?

Might information (quality or quantity) affect how this situation is resolved?

What priority does this situation hold for the public relations/communications staff and for the organizations top management?